Do we need to carry out the procedure at competent authorities when founding shareholders sell their

My company is a joint-stock company established for 06 years. Ms. Hoa is one of the founding shareholders of my company. In the near future, Ms. Hoa will transfer all her shares to another person. In this case, does my company have to make an announcement of new founding shareholders to the Business Registration Office? I hope that FDVN can give me an advice soon. Thank you.

FDVN’s opinion:

According to Article 32 of the Law on Enterprises 2014, the enterprise must notify the Business Registration Authorities about any change of the following contents:

“a) Changing the business lines;

b) Changing the founding shareholders if the enterprise is a joint-stock company and shareholders being foreign investors, unless the enterprise is a listed company;

c) Making other changes to the application for enterprise registration.”

The founding shareholder means any shareholder that owns at least an ordinary share and whose signature is on the list of founding shareholders of the joint-stock company (Under Clause 2 Article 32 of the Law on enterprises 2014). The founding shareholders prescribed in Clause 2 Article 4 of the Law on Enterprises shall be enumerated on the list of founding shareholders that are submitted to the Business Registration Office upon registration of the enterprise establishment (Under Clause 16 Article 1 Decree No. 108/2018/NĐ-CP).

According to the information provided by you, Ms. Hoa is a founding shareholder of a joint-stock company, so when Ms. Hoa transfers all her shares to another person, the transferee will not be a shareholder founder of your company.

Clause 1 Article 5 of the Circular No.20/2015/TT-BKHĐT amended and supplemented by Clause 3 Article 1 of the Circular 02/2019/TT-BKHDT describes as follows:

 “1. In case of changes in information about a founding shareholder of a joint stock company, the enterprise shall send a notification to the Business Registration Office of the province where its headquarters is located in accordance with Clause 16 Article 1 of the Decree No. 108/2018/ND-CP. Only unlisted joint-stock companies may change their information concerning founding shareholders”.

According to Clause 16 Article 1 of the Decree 108/2018/ND-CP:   

“…

2. A notification of changes of information about founding shareholders shall be only sent to the Business Registration Office in case the founding shareholders have not paid or have partly paid for the shares they register according to Clause 1 Article 112 of the Law on Enterprises. Founding shareholders who have not paid for the shares they register are indisputably no longer shareholders of the company according to Point a Clause 3 Article 112 of the Law on Enterprises and shall be removed from the list of founding shareholders of the company.

…”

Hence, the transfer of shares of the founding shareholders will not need to be notified to the Business Registration Office where the Company has registered.

That is the advice of FDVN Law Firm based on studying law provisions and theories. We hope that our opinions would be useful.

Legal Advisor: Nguyen Thi Suong

FDVN Law Company

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